The most successful retailers take a partner-oriented approach for their omni-channel model

In recent years, retailers have found it increasingly difficult to attract consumers to stores. The reasons include a tough economic environment, but also growing competition from online marketplaces such as Amazon and e-Bay. These challenges have forced traditional retailers to rethink their business models. One of the results is omni-channel. For omni-channel to succeed, close partnership between retailers and logistics service providers is essential.

What is omni-channel?

Omni-channel refers to retailers using multiple methods to reach consumers. It means giving customers a choice: coming into the store; ordering online and having products delivered to their home or other location; or selecting the option of picking products up at the store.

Crucially, omni-channel seeks to serve all these additional distribution channels from the same stocks, assets and supply chains. This has major economic advantages, but creates considerable extra complexity in the supply chain – something retailers and logistics providers are becoming increasingly concerned with. But in an age where one-click purchases and two-day delivery are becoming the norm, consumer convenience is key. The omni-channel model is only expected to get more popular – and more advanced.

Customized and complex

Omni-channel systems must be customized to suit each retailer’s business, taking into consideration their retail locations, the products they sell, and the shopping habits of their clientele, among many other factors. These factors greatly influence retailers’ supply chains, and to get the most out of your omni-channel system, it needs to be integrated with the supply chain.

Unfortunately, this is where issues can occur. When the business side and the logistics side are not synchronised, this can lead to problems with efficiency and accuracy in omni-channel. If customers get their orders later than projected or receive the wrong products, it can be damaging and costly to the retailer.

Partnering with logistics providers

Because the supply chain plays an important role in the omni-channel model, it’s crucial for retailers to work closely with logistics service providers. With their specialist knowledge, logistics providers can help retailers design the best solutions to suit their business.

In this respect, transparent and collaborative business relationships are more important than ever before. In the past, retailers were essentially in charge of everything, and they would simply ask logistics providers to act based on their needs. Today, the most successful modern retailers take a more partner-oriented approach.

This approach is ideal for creating a sustainable supply chain setup within the omni-channel model, with a supply chain that is flexible enough to change when it needs to. This means that when we set up an omni-channel system for retailers today, we would not expect it to look the same in five years. The retail business can change very quickly, so they need to have a supply chain model that is able to adapt to change further down the road.

Great potential for future growth

Omni-channel is a very new concept in much of the world, so there is still a long way to go and a lot more potential for development. Major retailers have experienced notable success with omni-channel, so expect it to expand and be applied to a variety of new industries and countries around the world, addressing B2B models as well as consumer markets.

The key takeaway is that omni-channel goes hand in hand with logistics. To get the most out of omni-channel, retailers need to place a priority on logistics and work closely with their logistics providers; they simply cannot overlook the effect on their supply chains.

This article is based on an interview by Logistics Manager. For the original article click here.

Hans Elmegaard has worked in the logistics and supply chain industry for more than 18 years. He has extensive experience in managing and guiding global retail supply chains and providing solutions to some of the world’s largest retailers.

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